Complete Story

02/06/2009

Broadband funding in stimulus plan sparks debate

By: Joelle Tessler, AP Technology Writer, CedMagazine.com

WASHINGTON (AP) – Among the economic stimulus proposals moving through Congress is one that fulfills an old dream of broadband boosters. It would offer substantial funding for high-speed Internet networks in corners of the country that still rely on dial-up connections or have only one broadband option.

The hope is that construction of these networks will create jobs, and that better access to broadband will spur all sorts of new economic activity. Yet not everyone agrees that broadband funding belongs in a stimulus plan.

Some critics of the idea wonder how many people will actually sign up for the new networks once they are built. Others question how many jobs broadband investments will really create. Even supporters debate whether Congress is going about funding broadband expansion the right way.

Recent surveys by the Pew Internet & American Life Project have found that 57 percent of Americans subscribe to broadband at home, while 9 percent rely on dial-up service. Others go online elsewhere – but 25 percent simply don't use the Internet at all.

Those holdouts are the hardest to reach. They include many poor and elderly people, as well as residents of rural areas that the big broadband providers have abandoned as too costly to serve – an issue that Congress is trying to address.

The broadband proposals are still taking shape as Congress debates the broader stimulus plan. But the bill that ultimately emerges is likely to contain $6 billion to $9 billion to help fund landline and wireless broadband networks in unserved and underserved areas. It also is likely to give tax incentives to encourage companies to invest in new or faster broadband networks.

These investments will create new jobs up and down the economic food chain, said Robert Atkinson, president of the Information Technology and Innovation Foundation. His group estimates that a $10 billion investment in broadband would produce as many as 498,000 new jobs.

Those include the construction workers and telecommunications technicians who must dig up streets, lay down fiber-optic lines and install wireless towers, as well as the engineers and factory workers at companies that make the fiber, electronics and computer equipment needed to build the networks. Much of that equipment is made overseas now, but Atkinson's projections exclude jobs that would go abroad.

Broadband also produces what Atkinson calls a "network effect" that creates many more indirect jobs. People who sign up for broadband, for instance, are more likely to purchase a new computer and buy services online, he said. Broadband also serves as a foundation for businesses that otherwise might not exist – from Internet retailers to online entertainment services to social networking sites.

In addition, broadband makes it possible for doctors to consult with patients hundreds of miles away, for students to take online classes at universities across the country and for governments to deliver services more efficiently, said Jeff Campbell, a senior policy and government affairs director at Cisco Systems Inc., a leading maker of networking equipment.

However, Scott Wallsten, senior fellow with the Technology Policy Institute, is dubious that those indirect benefits really produce the vast number of new jobs that supporters presume. And he questions whether the broadband proposals in the stimulus plan could simply reward telecommunications companies for making network investments that they would have made anyway.

John Horrigan, associate director for research at the Pew Internet project, also points out that just because more Americans are given access to broadband doesn't guarantee that they will subscribe.

A Pew study found that 14 percent of today's dial-up and non-Internet users say they don't subscribe to broadband because it is not available where they live. But far more – 51 percent – say they are just not interested.

Senate Democrats have been seeking $250 million to promote broadband adoption. Proponents say those efforts could include helping poor people buy computers and teaching people how to navigate the Web. But if the goal is to increase broadband adoption, "does that belong in a stimulus package?" Horrigan said. "I don't know."

For his part, Atkinson, head of the technology foundation, has a different worry: that Congress is attaching too many strings to the broadband grants.

While private companies, state and municipal governments, nonprofits and public-private partnerships would all be eligible for federal support, it remains unclear whether big broadband providers would actually apply.

That is because some proposals being debated would give a significant amount of their grant money to networks that can deliver Internet connection speeds that might be difficult for most broadband providers to offer in the next 12 to 18 months, Atkinson said.

What's more, Congress appears likely to require many of the grant recipients to comply with "open access" or "nondiscrimination" mandates. While those terms would be left to the Federal Communications Commission to define, some technology-policy analysts believe the rules could end up imposing "network neutrality" rules that would officially bar broadband providers from prioritizing certain kinds of Internet traffic.

Those details aside, this is a crucial moment for supporters of a big government investment in broadband. Much as the rollout of the electrical grid and the U.S. highway system helped spark economic growth in rural areas during earlier generations, they say, more widespread and affordable broadband today could spur benefits that otherwise might not occur.

"This is an important recognition by the government that broadband is the infrastructure for the 21st century," said Cisco's Campbell. "It's not just about roads and bridges anymore."